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UK House Prices See Highest Growth In Six Years In 2020. The average UK house price has gone up by 7.5% this year, according to the Nationwide Building Society

UK House Prices See Highest Growth In Six Years In 2020

The average UK house price has gone up by 7.5% this year, according to the Nationwide Building Society

This is the highest growth rate in six years despite the challenges that 2020 brought to the national and global economy. In fact, according to the Global Property Guide’s investment analysis, “34 of the world’s housing markets for which figures are available showed stronger upward momentum during Q3 2020, while only 21 housing markets showed weaker momentum.” The average UK house price is now £230,920.

There are a few explanations for this increase in prices even during the pandemic. One is the increase in working from home. As work became more virtual and homebound due to the pandemic, combined with school shutdowns and homeschooling, individuals and families found their need for better and bigger spaces became exponentially greater.

The second and likely most prominent reason for this increase in house prices is the stamp duty freeze that was first announced in July of 2020 by the Chancellor of the Exchequer Rishi Sunak after the first pandemic quarantine in hopes of reviving the housing market. It was clearly successful.

This temporary freeze on stamp duties, also known as transfer taxes, applies to all purchases in England and Northern Ireland of a maximum of £500,000. For purchases over that amount, the first £500,000 is free of transfer tax, with the remaining amount taxed according to a tier. This leads to a savings of up to £15,000.
The stamp duty freeze will continue until March 31, 2021. This means the housing price growth may continue into this year. However, like many markets, this largely depends on the strength and direction of the pandemic in the coming months.

The growth in housing sales prices began in January, with a 3.6% growth, according to property website Zoopla. COVID-19 brought the housing market to a complete shutdown and all expectations and estimations for future housing prices were immediately in question. However, even with the drop in prices due to the pandemic, the prices remained above those of 2019. Coupled with the stamp duty freeze, the sudden need for a home that could function as sanctuary, office, school, and even church led to the spike later seen in housing prices.

The market has become so flooded with buyers and sellers that closing sales in a timely manner has become difficult. This means that many buyers who hope to secure their new homes in the next three months in order to cash in on the stamp duty freeze before March 31 will most likely miss out on the stamp duty freeze. But that does not mean those buyers will stop trying to slide their purchases in under the wire, which will most likely only cause the price growth to continue over 2021. However, experts are wary to make estimations as 2020 has left us cautious on expectations. For the UK housing market and for many other things, it remains to be seen what 2021 has in store.

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